While there are a number of ways an employer may be sued by an employee, wrongful termination and employment discrimination are two major areas employers need to be sensitive to in order to avoid costly employee lawsuits.
One thing to keep in mind is that the majority of employees are considered "at will" employees, meaning that they may be terminated at any time for whatever reason the employer sees fit, provided the reason isn't motivated by discrimination, retaliation, or other illegal purposes.
Employers must not discriminate against employees because of their race, sex, national origin, disability, religion or age. Firing an employee for any of these reasons is illegal. Likewise, employers may not fire an employee because they become pregnant or have a medical condition related to pregnancy or childbirth. Most states also extend to employees all the protections from wrongful termination listed under federal law.
Employers may not fire employees for exercising their rights under state or federal anti-discrimination laws. Employers should be cautious about firing an employee for making a complaint. Doing so could be perceived as retaliatory.
It is also illegal, under the federal Employee Polygraph Protection test, for employers to fire an employee for refusing to take a lie detector or polygraph test. The federal law also prevents most private employers from using such a test to screen applicants for employment, but doesn't affect public employers such as police agencies or other governmental institutions.
It is important to keep these principles in mind before terminating an employee. Doing so could help your company avoid expensive settlements or litigation. Employees, too, should keep these things in mind to ensure their employer doesn't get away with engaging in illegal practices.
Source: Reuters, "Laying Off? Top 3 Ways Employers Get Sued," Jason Beahm, 3 March 2011.